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Which Way Wednesday – Fed Edition

800,000 deaths.

That's the milestone we hit today, less than two years into the Covid crisis.  If it never ends, 50 years from now it could be 20M dead – will the number matter then?  Well, that won't happen – it's slowing down, right?  No.  That is not right.  Since August 1st, call it 4.5 (21%) months out of 21 – we've had 186,000 (23%) deaths – this thing is really not slowing down at all.  

Now, it's not a Global catastrophe.  The US is unique in the number of infections and deaths in all of the World.  Our lack of public health care and our disdain for facts and science combine to keep us dying in droves and our hospitals are filling up fast again.  1/3 of our population still isn't vaccinated – that's 100M Americans just walking around as if nothing at all is wrong – and these are not the kind of people who wear masks, wash their hands or maintain social distancing protocols either.  

These anti-vaxxers are a powerful voting block being courted by the Conservatives and they have been going to court to prevent vaccine mandates, mask mandates and other measures meant to discourage the spread of Covid – it's the Right to Infect they are protecting and it's making America the most dangerous country on Earth to live in.  1,260 people a day (average) are dying of Covid in Amercia in December – up from 223 average in July – we are very much going the wrong way – again.

PHOTO: ANGUS MORDANT/BLOOMBERG NEWSIn Florida, an epicenter of the current surge, hospitalizations of Covid-19 patients shot higher in the past five weeks, data from tracking group CovidActNow show. The climb is sharper than last winter, when it took nearly three months for a smaller surge to peak in Florida. AdventHealth Central Florida was treating 1,060 Covid-19 patients on Friday, surpassing a previous peak of 900 in January.

We've had a small pullback in the markets but nothing that indicates any real fear of what is obviously a strong resurgence in Covid cases.  Readings out of China indicate a significant slowdown in November as restrictions came back on and Europe did the same so we can expect the same results when they announce their economic data for November.  The US might be different because, unlike other countries, we don't mind a little extra death and disease into the holidays.  

Another "cost" of not containing Covid is not containing inflation, which has been running out of control.  Why?  Well, less people working causes fewer goods to be produced but we give the workers (and idle businesses) money so they can spend it without producing and that causes the same or more money to chase after fewer available goods and services which, in turn, causes the prices of the goods and services to rise.  This is exacerbated by the fact that the Top 10% can afford to pay much, much more for the marginal goods and services so inflation runs up a very steep curve, which puts the price off goods and services out of reach for those on the bottom.

Trickle Down Economics - a success? | EDITORIAL CARTOON - Baltimore SunSince the problem was adding money into the system, putting even more money into the system to help the poor only makes things worse – especialy since Americans don't believe in helping the poor, so we give money to the rich so they can "trickle down" their wealth on the bottom end of the population.  

At the last Fed meeting, Chairman Powell finally admitted that inflation was becoming somewhat of a problem but it may be too late to fix it.  The Fed will make a policy announcement at 2pm and we will discuss it live, during our Trading Webinar, at 1pm, EST.  

We will see what they actually plan to do about it but probably not much since we're in the middle of another rising wave of Covid and "not much" is a market booster since the Fed is showering the Investor Class with far more money than they could ever spend – or trickle.

trickle-down-effect

82 Theory ideas | sociology, sociology theory, sociology major

 


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  1. Your number of deaths reminds me of your yesterday’s comment of the man in jail. Question would you rather stay in your room or die in the courtyard?
    Simple solution to the anti vaxxers, let them pay their own hospital bills. Punto.


  2. Federal government has control over Medicare and Medicaid so can issue a mandate that anyone who is hospitalized for Covid is NOT covered. States would be holding the bag so maybe they would decide to get all healthcare workers vaccinated, at least.


  3. Inflation/commodities- I will be first to admit lack of knowledge of this relationship but commodities are supposed to be defensive in the face of rising prices. So poking around for such plays that may be reasonable priced I am initially looking at DOW and LYB. Any thoughts/suggestions? 


  4. Good morning. Here is the link to today's webinar. 

    https://attendee.gotowebinar.com/register/850909169932982795


  5. With omicron having a doubling rate of three days im pretty sure anti vaxers everywhere will have a change of heart about the jab in about a month.

    unfortunately by then it might be too late.


  6. Good Morning.


  7. Phil- 

    Maybe I can't get past the paywall — but it appears that those articles about Covid in Florida are from July and August.  According to the NYT current numbers and hotspot map — Florida is actually doing very well compared to other states. 

     

    https://www.nytimes.com/interactive/2021/us/covid-cases.html

    If I am incorrect – let me know – just trying to stop the spread of misinformation  if warranted.


  8. Phil / the new site      any way you can help us get around all the paywalls.   WSJ, Seeking Alpha, Bloomberg, MarketWatch, most of the major newspapers, etc.  all have paywalls that make it harder and harder to do research or follow links posted here .  


  9. Even more simple publish a six weeks intensive care bill in a hospital against a 50$ vaccine, free in Europe mostly, that will clear the Sh. in the brain of any anti vaxxer, if they still have one. 


  10. jeffl-I don't know about Fla, BUT our hospitals in No Wisc and Minn are at full capacity with covid patients. One hospital in Duluth took half their oncology ward and turned it into covid isolations wards. Some are taking NO elective surgeries at all. Those who don't choose to protect themselves and their loved ones are brainless Yodi.


  11. Hospitals in NNJ have experienced an exponential increase in COVID patients.


  12. Is there a website that shows COVID hospitalizations or hospital capacity by area?


  13. Phil/T – Do you think another cut in the dividend is baked into the price here? Seems inevitable. I decided to take delivery on my short puts since BE is 20, it's a 1/4 position, and I like the fundamentals. I would like to sell another round of puts. Not sure the upcoming adjustment for the options from the pending deal matters to me since I don't mind owning the stock. Thoughts? Thanks.  


  14. Emailmike/The Bug – the CDC has the most comprehensive data, but their site is slow.

    https://covid.cdc.gov/covid-data-tracker/#trends_dailytrendscases

    I like the Brown Uni. site for the map display.

    https://globalepidemics.org/key-metrics-for-covid-suppression/?fbclid=IwAR1c2BAWzkXYH4u0MAwOLOA_t2OgJU0UEtmB-txc7zJABeHwgHuOdHj6wcU


  15. Snow – Great, thanks!


  16. PFE/Phil Been waiting to sell 40 PFE $60 cov calls to complete bcs .. should I be very happy to get $8.65 for the '24 $60s and be done with it or would you be looking at shorter term shorts with more flexibility? Maybe 20 of the '24s and some shorter term calls?

    40 PFE '24 $45c ($12.4)

    -10 '23 $33p ($5.1)

    Thx.


  17. wingwalker PFE I was looking at the situation in Oct 21 and set up a leap 35/45 half cover and look where we are now. 60 is still very low with all the corona in the air, the world can not get enough of it. Vaccine I mean!!!!


  18. Good morning!

    Solution/Yodi – It's not about that, it's about the FACT that there's no reason every person in the US shouldn't be vaccinated (vaccines are available in drug stores, supermarkets, etc – for free) and the unvaccinated are a public health risk to everyone else.  We will never be rid of a disease if we allow it to run rampant and mutate inside of 1/3 of the population and let that 1/3 of the population mix with the rest of us.  This is simply not a rational way to fight a virus.

    Why don't we let 1/3 of the people not pay taxes?  How is it we can mandate that but not public health care?  That's because we have allowed the Conservatives to pack the courts with judges who don't actually care what the law really says – this is how you dismantle the base of a free society.  Putin has been winning for years – he divided the country, packed the courts to bring down our justice system (turned it partisan) and his continuing disinformation campaigns have caused us to lose faith in the media, science (CDC, Climate Change, Environment, Clean Energy) and even in Democracy itself.

    How many things have the Trump/GOP done in the past 7 years that haven't ended up being in Russia's favor?

    Mandates/Pirate – But that then goes against our greater principles – right into Putin's trap.  How about we just don't let those people go to movies, restaurants, public events, schools, malls (that would do it!), etc?  When I was a kid, there were all sorts of shots you had to get to go to school.  What changed?  

    Dow/Pstas – We have them in the LTP:

    DOW Long Call 2023 20-JAN 55.00 CALL [DOW @ $54.02 $0.70] 20 8/13/2021 (402) $25,000 $12.50 $-6.28 $12.50     $6.23 $0.65 $-12,550 -50.2% $12,450
    DOW Short Call 2023 20-JAN 70.00 CALL [DOW @ $54.02 $0.70] -20 8/13/2021 (402) $-11,100 $5.55 $-3.80     $1.75 $0.16 $7,600 68.5% $-3,500
    DOW Short Put 2023 20-JAN 60.00 PUT [DOW @ $54.02 $0.70] -10 8/13/2021 (402) $-9,250 $9.25 $3.03     $12.28 $-0.13 $-3,025 -32.7% $-12,275

    I think they are a much better bargain than LYB.

    Speaking of price – down in Florida it is simply amazing how many people think the price of a stock has something to do with the value of the company.  And I mean people who have very large retirement accounts.  I have so many conversations with people who think GOOGL ($1.9Tn) is worth more than AAPL ($2.9Tn) because their stock price is higher – things like that.

    Articles/Jeff – You are right but those were the links in the WSJ article from today, interestingly enough.  I did not notice the dates were old.  

    Paywalls/Stock – Can I commit usage violations, risking hundreds of thousands of dollars in fines and potential jail sentences to save you subscription fees?  No.  Try opening things in Incognito Window – sometimes that helps.  

    Hospital Utilization/EMike - https://protect-public.hhs.gov/pages/hospital-utilization

    T/Seer – I'm sure most of the downward pressure is dividend funds bailing but, at $22, the dividend is $2.08 so about 10%, which is silly.  If they cut it in half, it's still 5%.  The spin-off will be a much bigger deal, we'll see how that squares up.

    PFE/Wing – I'd be very happy to sell 20 for $8.65 and then sell 10 more for $7.50 and 10 more for $7 and you'd average $7.95 at worst and possibly much more than $8.65 if it keeps going higher.   I think PFE is a bit too unpredictable for short-term call selling – on the whole, I'd just be happy with the (at most) $5.40 spread that pays $15 at $60 and, if things calm down, THEN you can sell 10 (1/4) short-term quarterlies for a bit of income.  The March $60s are $2.70 so $2,700 selling those against a net $ 16,500 spread is a very nice quarterly return while you wait.




  19. Hey Phil – Any thoughts on SDGR?  They have some impressive institutional holders…. Thanks!


  20. Interesting the PFE scale is in relation to the corona curve. After Aug every one thought corona is over, free for all, but look what happened.


  21. Phil/T – How will the puts be adjusted for the spinoff? I would like to sell more LEAPS now. Thanks.





  22. China’s Economy Needs More Help



  23. SDGR/1020 – Losing $92M on $129M in sales – if they're lucky they'll stop selling stuff before they go broke.  Not for me!  Certainly I wouldn't pay $2.8Bn to see how badly I get diluted when they run out of cash ($161M as of 9/29, so you have about a year if those short-term investments don't pan out).  

    T/Seer – We have no idea how they'll adjust until they announce it.  

    Webinar time!


  24. SDGR/Phil   I guess I'll buy a little more of VIAC instead…. ;(


  25. …notice the sad face has a wink…


  26. Phil / AAPl / AVGO – and big tech taking off  after fed announcement….  any thoughts on this?


  27. My guess is expecting minor rate hike(s) next year so the punch bowl is refilled .


  28. 4,700 on /ES again!  

    VIAC/1020 – Sad indeed.

    Tech/Batman – As Pstas says, the rate hikes are relatively minor and tapering was going to end anyway and the big picture is, they didn't hike rates today.  

    Delay/Pstas – Wow, no infrastructure bill?  Don't see how that's good.


  29. The rumor was about the BBB bill. 


  30. New York is building a wall to combat the worst effects of climate change


  31. Omicron Is About to Overwhelm Us


  32. Airbus Poised to Sweep Qantas Order to Replace Boeing 737s




    • The major averages are ended at session highs after the Fed quickens the taper pace and Chairman Jay Powell explains his new hawkish perspective.
    • Bulls look comfortable with the Fed chief's balance of addressing inflation and not taking the punch bowl away suddenly.
    • The S&P 500 (SP500) +1.6%, Dow (DJI) +1.1% and Nasdaq (COMP.IND) +2.2% ended the green, having been down through the day before the FOMC announcement.
    • The Treasury yield curve steepened, with the 10-year up 2 basis point to 1.46% and the 2-year flat at 0.66%.
    • Powell says that he almost sped up taper before the last meeting after a hot employment cost index number. He also adds that with a much stronger economy this time it wouldn't be necessary to have a long delay between the end of tapering and liftoff.
    • That could mean a quarter-point hike as soon as March, with fed funds futures now pricing in a 50/50 chance.
    • Powell says the the labor force participation rate recovery is "going to take longer" but that inflation well above target could mean rate hikes before maximum employment is reached.
    • "I'm a bit nervous that Powell may be underestimating the speed with which Omicron is going to rip through the US and scare people, at least for a while, into staying home," Pantheon Macro's Ian Shepherdson tweets. "Jan is always tough for hospitality; Jan 22 could be absolutely brutal."
    • The FOMC's dot-plot medians now show three rate hikes in 2022, up from one and three more in 2023.
    • Members, on average, lowered forecasts for the unemployment rate to 3.5% for 2022 from 3.8%, staying that way through 2024.
    • "Waiting for full employment … could get there quickly given recent pace of improvement, so need to end QE sooner and prep markets for liftoff," T.S. Lombard's Dario Perkins tweets. "It's not rocket science (and it's not that scary)."
    • "Put another way, 'job done on inflation. Full employment could be met quicker than we thought. So what are we waiting for?' You gotta figure out the pace & terminal rate based on how economy performs in 2022-23. (which is the hard part)."
    • Retail sales rose 0.3% last month, well below the 0.8% rise economists were expecting. Add in inflation and real retail sales declined.
    • "Okay, so the 'buy in Oct to get your stuff early' may have had an impact," Guy LeBas, chief fixed income strategist at Janney, tweets. "Retail sales ex-auto & gas +0.2%, but it's just one month's softening after an incredibly run. Wouldn't read too much into it."
    • "Durable goods wacked, department store collapse," macro strategist George Pearkes tweets. "Nonstore relatively weak too, dining out ramping up still. This report is a tentative piece of evidence towards a mean-reversion in goods vs services spend, though caution warranted on the SAs IMO."
    • "If durables goods continue to plunge the excess demand/inflation story will implode," TS Lombard's Dario Perkins says.

    They put a good spin on things.  

    CSX +1.49%Dec. 15, 2021 4:04 PM ET

    • The Association of American Railroads (AAR) reports US rail traffic down 6% Y/Y to 513,366 carloads and intermodal units for the week ending December 11, 2021.
    • Carloads up 0.3% to 239,029; intermodal volume down 10.9% to 274,337 containers and trailers when compared to the same period last year.
    • 5 of the 10 carload commodity groups posted an increase, including minerals, up 2,982 carloads, to 31,052; coal, up 2,979 carloads, to 66,762; and chemicals, up 2,706 carloads, to 35,297.
    • Commodity groups that posted decline during the period included motor vehicles and parts, down 3,660 carloads, to 13,953; grain, down 3,508 carloads, to 24,876.
    • For the first 49 weeks of 2021, U.S. rail traffic increased 6.1% to 24,832,873 carloads and intermodal units.
    • Overall, North American rail volume for the week ending Dec. 11, 2021, on 12 reporting U.S., Canadian and Mexican railroads, totalled 331,925 carloads, down 3.7% Y/Y; and and 354,599 intermodal units, down 10.8% Y/Y.
    • Total combined weekly rail traffic in North America was 686,524 carloads and intermodal units, down 7.5% Y/Y.
    • It includes Mexican railroads, which reported 21,016 carloads (up 6.6% Y/Y) and 15,653 intermodal units (up 9.9% Y/Y); and Canadian railroads traffic of 71,880 carloads (down 17% Y/Y) and 64,609 intermodal units ( down 14.3% Y/Y).
    • Kansas City Southern's shareholders voted to approve the company's sale to Canadian Pacific Railway (NYSE:CP).
    • Related tickers: Union Pacific (NYSE:UNP), Berkshire Hathaway (BRK.ABRK.B), Canadian National Railway (NYSE:CNI), CSX Corp. (NASDAQ:CSX), Norfolk Southern (NYSE:NSC), Union Pacific (UNP), and Brookfield Infrastructure Partners (BIP,BIPC).
    • Also Read: Gibson Energy gets DRU up and running – ready to rail more oil from Alberta to the Gulf Coast

    LIND +0.98%Dec. 15, 2021 3:18 PM ET5 Comments

    • Norwegian Cruise Line Holdings (NCLH -2.6%), Royal Caribbean (RCL -2.0%), Carnival (CCL -1.8%) and Lindblad Expeditions Holding (LIND -1.0%) swing lower after the timeline for a full recovery of the cruise line sector appears to be pushed back again with Omicron risk seen in the near term.
    • The latest Omicron developments are cutting into some enthusiasm earlier this week over cruise line booking trends for November.
    • Riding the wave: The cruise line sector is one of the most highly correlated to pandemic headlines and has been a target of algorithmic trading that has added to volatility.


  33. Here is the replay of the PSW webinar from 11/15/2021

    https://youtu.be/Tl3CuDTo9mw


  34. Phil.   Post call rally.  
     

    The 10 day average cboe put call volume was at the highest seen in the past 13 months    I think the rally was a result of hedge funds covering bearish positions.   Given this there should be weakness into weekend.     Do you agree with this or you see something else?


  35. Phil.   Post FED rally.  
     

    The 10 day average cboe put call volume was at the highest seen in the past 13 months    I think the rally was a result of hedge funds covering bearish positions.   Given this there should be weakness into weekend.     Do you agree with this or you see something else?